'Fiscal cliff' averted: Markets rally but 'there are more problems to come in America'

The Telegraph's Head of Business, Damian Reece, says the jump in the FTSE 100
in the wake of the US deal to avoid the so-called "fiscal cliff"
is "a welcome start to the year," but warns of more challenges
ahead.

London's FTSE 100share index broke through the 6,000 barrier for the first time in almost 18 months after the US Congress backed legislation to stop a recession-threatening"fiscal cliff"of tax increases and spending cuts.

The index of leading shares closed up 2.2pc at 6,027.37, adding £32.8bn to the value of Britain's top companies.

The Telegraph's Head of Business, Damian Reece, called the surge a "welcome start to the year," but warned of further turmoil ahead.

"There's going to be a lot more political horse trading needed over the next few weeks in Congress if America is going to comprehensively move on from its current fiscal issues," he said.

"What Congress needs to deliver also are some rather politically tricky spending cuts, so the markets, while they have taken off at the moment, at the start of 2013, I don't think you can assume that we're going to see this kind of exuberance carrying on indefinitely because there are a lot more problems to come in America."